MRO Magazine

FEATURE REPORT: New challenges for workers and employers mean more complex power game is emerging; Trends changing in hiring, firing, job seeking

Study surveys 6,000 Canadian and U.S. workers...


August 31, 2001
By MRO Magazine

Study surveys 6,000 Canadian and U.S. workers

New York — Aug. 30, 2001 — Despite the general economic downturn and numerous recent layoff announcements, the labour market for talent remains in flux. A new reality for the talent management game is emerging, with the power between employers and employees, over half of whom are in the job market, shifting continually.

According to a new Towers Perrin study of nearly 6,000 workers in the U.S. and Canada across all organizational levels, this shift is a result of the so-called talent wars of the mid to late 1990s, which has significantly changed the mindset of employees — creating a workforce that is more sophisticated, knowledgeable and individualistic than ever before.

These characteristics remain entrenched even as the market for talent softens. Thus, far from being able to feel secure about needed talent, employers still see a need to compete aggressively in the labour markets and find new and creative ways to recruit, retain and engage the talent they do need for success.


The study, titled The Towers Perrin Talent Report: New Realities in Today’s Workforce, focused on employee views, examining attitudes of a diverse range of people working for medium to large companies across regions and industries. It also targeted a subset of respondents who have managerial roles and are involved in recruiting and retention. Both groups affirmed that the shifting dynamics at work in managing talent in today’s business environment have created a new reality for employers.

From the employee perspective, four key trends emerged:

* Employees generally are “in the market,” in some way, most of the time.

* Employees don’t place much emphasis on a long-term relationship with a particular employer.

* Employees define their relationship with their employer in increasingly complex ways.

* Employees care about different things when they’re joining a company than when they’re deciding whether to stay or how much of their discretionary effort to give.

“Attracting the right people, who have a clear handle on their market value, and then getting them to do their best work, requires employers to think more in terms of a collection of individuals — each with very different goals and needs — than a homogeneous group of workers,” said Chris Michalak, a Towers Perrin principal.

From the company perspective, based on views of managers with people responsibilities, there is corresponding recognition that finding and managing talent is a much more difficult game than in the past, requiring new strategies and tactics. Two trends emerged here:

* Talent remains hard to find.

* Companies are laying off and hiring simultaneously.

“The fact is, the power between employer and employee in recruiting and retention shifts continually today and will continue to do so across industries, skill sets and locales,” Michalak noted.

“Employers must make talent management a priority. Understanding the environment, the workforce and the key levers to unleashing employee potential is imperative.”

Over half (56 per cent) of all workers in the study are in the job market in some capacity and of these, 12 per cent said they are actively looking. The remaining 44 per cent are essentially “job scanners,” saying they would consider new opportunities or other offers. Employees in this group keep their eyes and ears open in various ways: 40 per cent have talked with friends at other companies; 36 per cent have researched job posting websites, and 30 per cent have talked with a former colleague who has recently left the company.

The job scanners are a whole new category — people who may not be ready to leave tomorrow, or even next year, but who are scanning job boards, posting resumes and waiting for something interesting to pursue. And they represent a potential “time bomb” for employers, especially since those most likely to be job scanners are the 30- to 44-year-olds who are potentially the future leaders of an organization.

The Internet is one of the driving factors behind the rise of this large group of job scanners. With this powerful tool at their fingertips, employees have become far more knowledgeable and sophisticated about employment and job searches than ever before. They have a wealth of information about jobs, salaries, culture and management style readily available to them that they can collect without indicating their desire to change jobs in any overt way. Indeed, web research is among the activities most closely related to employees’ intent to leave, and well over a third (39 per cent) of respondents have used it in some way, as follows:

* 29 per cent researched job posting web sites.

* 15 per cent researched salary surveys.

* 12 per cent submitted a resume to a job posting Web site.

* 10 per cent used a salary calculator on the Web.

* 7 per cent researched job discussion bulletin boards.

“The bottom line is that employees are highly informed about their options, and the Internet gives them the ability and ready access to find whatever they want to know, all without risk to their current position,” said Michalak.

Intensifying the mobility factor is the fact that mobility itself no longer carries the stigma it once held. Fully 60 per cent of respondents believe there is no longer an appropriate amount of time that one should remain with the same company. Only 10 per cent cited three to five years as appropriate. Very few respondents, just 3 per cent, indicate appropriate tenure of 10 to 15 years.

Consistent with employee perspectives, the managers in the study confirm that, despite the current economic climate, talent remains a scarce resource. The vast majority (88 per cent) of these respondents believe that, compared with more favourable times less than a year ago, it is now just as difficult or even more difficult to recruit and retain talented employees. And even more, 92 per cent, believe it is as difficult or more difficult to motivate and engage employees.

Given the complex dynamic of employee mobility, scarce talent, and the need to operate and staff as efficiently as possible, especially during the current economic downturn, it is perhaps no surprise that the nature of downsizing has changed. Employers now hire and fire at the same time.

First, the study found that the vast majority of employers making cuts are still out in the market looking for talented employees:

* 73 per cent continue to hire talented employees in the midst of downsizing.

* 42 per cent have created targeted programs to retain top performers.

Moreover, the study found that performance-based downsizing far outpaced other methods and decision criteria. Specifically, over half (54 per cent) are making cuts based on performance, first trimming low-performing employees (35 per cent) and/or business units (33 per cent). Only 24 per cent are making across-the-board cuts, and just 14 per cent are downsizing based on tenure.

“What we are seeing, possibly for the first time, is a market where at the very time employers are laying off large numbers of people, they are also recruiting needed talent and undertaking major efforts to retain their top talent,” said Michalak. “They’re focused on identifying the key skills and talents they need and distinguishing between top and average or poor performers.”

In this environment, employers need to know more about the workforce, and what levers they can pull to get the results they want. To get a better understanding of how employees view their employment relationships and how varied their desired “deals” might be, the survey asked employee respondents to self-select into five categories, which included:

* Balanced careerist — making work/life balance a priority

* Company-dedicated careerist — interested in long-term skill development

* Fast-tracker — seeking high involvement in the job, quick advancement and high reward

* Experimenter — trying many different things and building a portfolio of skills

* Free agent — moving quickly between/within companies where their skills are in highest demand.

Significantly, this inquiry revealed that 42 per cent of employees selected “balanced careerist,” with company-dedicated careerist following second at 28 per cent. Only 6 per cent called themselves “free agents.” Equal numbers (12 per cent each) selected “fast-tracker” and “experimenter.”

The fact that only a combined 30 per cent of respondents call themselves either fast-trackers, experimenters or free agents — categories more likely to be associated with individual success than a company relationship — gives lie to the well-publicized myth of the “free agent nation.” Most employees, by far, want some kind of relationship with an employer — but only if it’s based on mutual respect and a deal that suits their individual needs.

The study findings confirm that employees not only value a range of tangible and intangible rewards, but value different things at different stages of their careers and working relationships with a company. While competitive base pay and health care benefits are critical fundamentals, other elements are more or less important depending on whether the employee is deciding to join, stay or fully commit.

For instance, pay is certainly an important factor in attracting potential employees but, according to the study findings, employees indicate that pay alone won’t keep them in a job. When asked to estimate how much of compensation (base salary plus annual incentive) increase they would need to leave their current job, 54 per cent of respondents said they would require an increase of just 5 per cent to 10 per cent.

“What brings someone to a company is different from what keeps him or her there and is also different from what engages that person; that is, capturing the discretionary effort that produces top performance,” said Michalak. “If employers fail to distinguish among these, they fail to realize full return on their investments in people and rewards.”

“Companies that aspire to top performance need to focus just as much attention, if not more, on engaging employees once they’re on board, and focusing them on the things that will produce results for the business,” continued Michalak.

According to the study, the specific drivers of employee engagement include such things as: a reputation in the market as a good employer; an environment that supports teamwork and innovation; leadership effectiveness; a culture that recognizes top performers; development and advancement opportunities; and a clear line of sight between employees’ day-to-day activities and business goals.

The study included employees working for publicly traded companies, allowing for a comparison between high-performing companies (those producing top-quartile total shareholder returns or TSR), and low-performing companies (those with bottom quartile TSR) in critical areas. There are significant differences, including:

* 72 per cent of employees in high TSR companies say the company has a reputation in the job market as a good employer, versus 52 per cent for low TSR companies.

* 45 per cent of employees high TSR companies say the organization rewards top performers more than average performers, compared to 27 per cent for low TSR companies.

* 44 per cent of employees in high TSR companies say the organization provides recognition for talented employees, but only 32 per cent in low TSR companies have this view.

“Companies in our study that have consistently delivered superior total shareholder return get higher ratings from employees on many of the factors that engage the workforce,” said Michalak. “These companies also ‘seal the deal,’ scoring higher on performance-based pay and other rewards for performance.”

The study was conducted in the U.S. and Canada during April and May of 2001. A total of 5,707 randomly selected employees from companies with more than 500 employees responded. Of those, 4,942 were from the U.S., and 765 were Canadian. More than three-quarters of the respondents were from Fortune 1000 companies, and nearly 30 per cent of the respondents were managers.

Towers Perrin is one of the world’s largest management and human resource consulting firms. It helps organizations improve performance and manage their investments in people, advising them on human resource strategy and management, change and culture, total rewards, including compensation and benefits, HR technology, and administration and communication, both Web and print-based.

Source: BusinessWire